Paxful is still a custodial KYC exchange, albeit the fiat payment for trades occur person-to-person.

It's an improvement over something like Coinbase, for sure -- but there are exchange methods far superior to Paxful. For instance other P2P platforms like Bisq, RoboSats, and HodlHodl that are KYC-Free, and even KYC-free brokers like Relai, or other KYC-Free methods like Azteco (vouchers), ATMs that are KYC-free, etc.